Slow homebuilding threatens affordability gains: CMHC

Key Takeaways:

• Canada needs between 417,000 and 469,000 new housing starts annually to restore affordability by 2036. Construction is slowing faster than demand, creating a risk that underbuilding during current soft market conditions will trigger a severe future supply crunch.
• Outside of Calgary and Edmonton, new construction is heavily skewed toward rental housing. While this influx of rental units provides relief to renters, homeownership construction—particularly condominiums—has hit multi-year lows, threatening long-term affordability for buyers.
• Edmonton remains Canada’s only major market without a housing supply gap. Calgary is actively scaling up homeownership construction to meet demand, while Toronto, Vancouver, Montreal, Ottawa, and Halifax face growing long-term affordability risks in their ownership markets.

The Whole Story:

Recent gains in housing affordability in Canada are at risk as new home construction slows, especially in the homeownership market, according to Canada Mortgage and Housing Corporation’s (CMHC) latest Housing Supply Report. New estimates show that Canada’s housing starts need to rise to between 417,000 and 469,000 annually to restore affordability to pre-pandemic levels by 2036, leaving the country’s housing supply gap broadly unchanged from 2025.

“Although slower population growth has brought some improvements in affordability, new construction is slowing faster than demand,” said Aled ab Iorwerth, Deputy Chief Economist, CMHC. “The key risk now is Canada underbuilds during this softer market and finds itself further short of housing when demand strengthens again.”

Since CMHC’s previous estimates in July 2025, the housing supply gap has narrowed in Toronto, remained stable in Vancouver, and grown larger in Montreal and Ottawa. Record housing construction in Calgary has narrowed its housing supply gap significantly. Edmonton remains the only large market in Canada without a housing supply gap and is one of the country’s most affordable housing markets.

Across Canada’s major markets, except for Calgary and Edmonton, new housing supply is dominated by rentals, with ownership-oriented housing starts weakening considerably in recent years. While the new rental supply has markets moving toward more balanced conditions and providing some relief for renters, a future supply crunch in the homeownership market is likely. This puts the recent affordability gains experienced by homebuyers at risk.

Toronto: With rental housing driving the majority of new supply, the housing supply gap is increasingly concentrated in the ownership market, where new construction remains exceptionally weak. Toronto still needs to increase annual housing starts by at least 50% over the next decade to restore affordability to pre-pandemic levels.

Vancouver: With condominium apartments being the biggest source of homeownership supply and their construction falling to the lowest levels in more than a decade, the risk to long-term homeownership affordability continues to grow. Purpose-built rental apartments now account for about 60% of housing starts, compared with less than 20% a decade ago, and this added supply has brought more balance to the region’s rental market.

Montreal: Housing affordability has deteriorated significantly since 2019. Although rental construction has been significant in recent years, homeownership starts are near multi-year lows.

Calgary: Inventories of homes for sale have declined sharply recently, creating affordability challenges for prospective buyers. However, housing starts in the ownership segment are increasing, with new housing construction in Calgary continuing to respond to demand.

Edmonton: Edmonton’s homeownership construction remains very strong. With steady demand supported by the region’s affordability in this segment, developers continued to launch ownership-oriented projects.  

Ottawa: Most new development is concentrated in rental housing while construction in the homeownership market remains low, limiting future ownership supply.

Halifax: Despite recent years of record housing construction and recently easing rental market conditions, affordability challenges remain significant in Halifax. Stronger population growth has caused housing demand to outpace new supply, particularly in the ownership market.